VFCFC – Nov 14, 2013 Board meeting

Agenda  2012 Annual Report: Planning/ Cutting Permit Development/Mtn Pine Beetle Strategy Harvesting Road building/Road maintenance Reforestation Revenue /Log Destinations Cut control 2012 Summary  2013 Operating Plan  Approvals  Other – meeting Licence commitments

VFCFC 2012 Annual Report Planning  Cutting Permits CP 3 approved Jan 2012 (~86,000 m3); CP 4 submitted Oct 2012 (~53,000 m3); CP 5 is ready to be submitted (~17,000 m3);

VFCFC 2012 Annual Report  Harvesting Current year - logged 107,533 m3 to the end of October, 2012 Logging completed by Upper Similkameen Indian Band and Dennis Cook Holdings Ltd.  Post Harvesting Activities and Reforestation hectares were prepared for 2013 planting 45,030 trees were planted on 39.4 hectares  Mtn Pine Beetle Strategy: Continue harvesting on stands that are affected by Mtn Pine Beetle; Conducted aerial overview flight in August to observe infestation distribution and intensity; Focus harvesting plans on stands with the highest intensity attack levels;

VFCFC 2012 Annual Report Road Construction/ Road Maintenance  Existing road upgrade: 0.8 km  Temporary road construction: 11.1 km  Permanent road construction: 3.5 km

VFCFC – Revenue BlockForecast Volume (m3) Forecast Revenue ($/m3) Actual Volume (m3) Actual Revenue ($/m3) Total Actual Revenue CHI00819,000$177,29418,883$10.56$199,368 CHI04322,258$150,68721,807$9.86$215,084 CHI04414,500$110,12517,106$6.54$111,945 CHI04143,322$424,82949,737$6.80$338,203 Total98,980$862,935107,533$8.04$864,600

VFCFC – Log Destinations DestinationVolume (m3)Ave Price ($/m3) SPF sawlogs to Weyerhaeuser 75,016Q1,2 - $47 Q2,3 - $50 Oversize SPF to Gorman Bros 1,609Q1,2 - $70 Q2,3 - $75 Pulp to Ledcor chipper22,569$27.38 Pulp to Firemaster1,747$28.38 Post and Rail to PWP and PPR 3,219$32 Fir to Vaagan and Tolko3,372$50 to Vaagen $55 to Tolko Total – All Destinations107,533

Cash Flow Month Forecast ($)Actual ($) Jan$0 Feb$93,480$110,086 Mar$297,996$281,344 Apr$40,747$40,843 May$0 Jun$100,000$64,807 Jul$250,000$137,457 Aug$260,000$85,921 Sep$100,000$59,109 Oct$0$85,032 Nov$0 Dec$0 Total 2012$1,138,000$864,600

Cut Control (m3) est2013 est2014 est5 yr total AAC20,000 70, ,000 Total Harvest 013,085107,53396,21593,600310,433 Harvest charged to AAC 09,875 a 87,51186,00078,000252,579 A 2011 cut control letter is still being appealed. MOF missing a requested credit.

2012 Summary  Harvest strategy and forest stewardship plans are being safely executed.  13,085 m3 were logged in 2011 and 107,533 m3 were logged in 2012 for a total of 120,617 m3 harvested to date of the Licence.  all timber management and legal obligations are being met.  The Licence has been included in Weyerhaeuser’s Environmental Management System and is certified to the Sustainable Forestry Initiative (SFI) standard.  Economics are being affected by deteriorating condition of beetle attacked timber.

2013 Operating Plan  Continue to log beetle uplift volumes in Mtn Pine Beetle stands (consistent with Mtn Pine Beetle strategy)  Jan to April Log approximately 79,215 m3  June to August Log approximately 17,000 m3 in a block that has a forecasted high pulp %. This affects its economic viability. Recommend we include it in the 2013 plan. It is the right forest management decision to log it. Weyerhaeuser and VFCFC renegotiate a block specific fee structure for this block.  Forecast revenue of $609,503  See 2013 Operating Plan for more detail

Approvals Weyerhaeuser requests from the VFCFC Board to approve the 2013 Operating Plan, specifically to: harvest Blocks CHI 040, 044 and 045 (approximately 97,000 m3). sell: »Pulp at market price to local outlets first (Ledcor and Firemaster) »Post and rail to Princeton Post and Rail and Princeton Wood Preservatives unless otherwise agreed to by all parties – production split 50/50 »Oversize (>18” logs) and all Douglas Fir to best market. Carry out all other forest management obligations as defined in the Timber Management Agreement (ie planting, site preparation, road construction, road maintenance, surveys, cutting permit layout, etc)

VFCFC - Other Forest Licence Committments  (i) The Agreement Holder must conduct at least one formal public meeting each calendar year in a format satisfactory to the District Manager for the purposes of informing the general public of the activities the Agreement Holder proposes to undertake with respect to the Agreement.  (ii) Notwithstanding (i) above, the Agreement Holder, in conducting a formal public meeting(s), and in informing the general public of the activities the Agreement Holder proposes to undertake, will: Actively promote ongoing public awareness Report on activities related to past and future harvesting, including forest management performance, and Provide an accounting of participation in community projects/investments and general economic activity attributable to the operation of this Agreement.

VFCFC - Other Management Plan commitment examples  The Community Forest will: invest in archaeological and cultural site assessment in the initial years of the Agreement to fill in information gaps identified by the Upper Similkameen Indian Band explore options, including research and field trials, for enhancing the …… will also engage in a planning process with ski association…. 1.3 …use a performance measures table to evaluate performance develop a formal communications plan during the first year of operation….

VFCFC - Other  For the Board to consider: Develop a plan to meet commitments Funding for land based projects Weyerhaeuser can assist

Questions?